Mononuclear phagocytes mediate physiological and pathological processes in the lung. In host defense and in the regulation of the pulmonary environment, there is evolving evidence that these cells participate in the response to lung injury. Our data suggest that mononuclear phagocytes are intimately involved in lung fibrosis. Others agree, as the number of mononuclear phagocytes in the lungs of IFF patients predicts pulmonary function and symptoms. SHIP1 and SHIP2 negatively regulate M-CSF-induced Akt and NF-?B activation and cellular activation and survival. The serine threonine kinase Akt1 is important in cellular survival and differentiation. In this revised proposal we will focus on understanding how SHIP 1/2 regulates monocyte survival and differentiation and Akt1 in M-CSF-stimulated cells. Using macrophages that express constitutively active myristoylated Akt1 (myr-Akt1), we will investigate the role of Akt1 in survival and differentiation of these cells. We will also investigate the molecular mechanism by which bleomycin worsens fibrosis in myr-Akt1 mice. We will also define the role of the src family kinase Lyn in SHIP1 function. We will investigate the role of Akt1 expression in mononuclear phagocytes in vitro and in vivo in this revised proposal and determine the regulation of Akt1 by SHIP1 and SHIP2 in M-CSF-stimulated cells as important regulators of this biochemical pathway and seek to understand the relevance of these events in lung fibrosis and remodeling. To accomplish these goals, we will pursue the following Specific Aims. Specific Aim 1) To understand the role of Akt1 in the survival and differentiation of mononuclear phagocytes. Specific Aim 2) To understand the role of SHIP-1 and SHIP-2 in mononuclear phagocyte differentiation and survival. Specific Aim 3) To understand the molecular mechanisms of bleomycin-induced lung fibrosis and inflammation in mice with macrophage selective myr-Akt1 expression compared to wild type animals.